Do the right thing: Goldy Hyder urges Jim Flaherty to be bold

With the country teetering toward an election, the 2011 budget could well be an election platform. Since that is the case, Finance Minister Jim Flaherty must balance the temptation to spread the wealth with the need for fiscal prudence.

News coverage will focus on corporate tax cuts (I’m all for them), whether the government “listened” to opposition “demands,” and, of course, whether or not the government will live to see another day after the budget vote.

Pundits, pollsters, and politicians will be eager to learn if the budget will earn opposition support or lead to an election — no matter how unnecessary. This is a choice, in part, for the Harper Government — sorry, I couldn’t resist.

A poison pill — which, to be clear, I am not expecting — could backfire with voters as did one prorogation too many just a short while ago. If it appears the government did what it could within a reasonable fiscal framework to address opposition issues — relief for seniors, for example, or a $2.2-billion HST payment to Quebec — then it will be a clear signal Parliament can continue its work.

But for the average Canadian, the real story is personal rather than political. People are concerned about the rising costs of utilities, gas and groceries, and they expect interest rate increases will make it more difficult to reduce personal debt. They are looking to all levels of government — “help me” — and will not be enthralled with political games.

Minister Flaherty has the opportunity to put good policy before good politics. He could do the right thing by refusing to leave the tough stuff for later. Such an approach may sound suicidal in a minority Parliament. In fact, it is anything but.

A recent Harvard study offers a persuasive argument that governments that make difficult budget decisions are often rewarded at the polls. Many premiers, irrespective of stripe, have been able to ride the message of fiscal prudence to electoral success and there is no reason the same would not hold true federally. In these times of economic uncertainty, good policy can indeed be good politics.

Governments only fall on budgets by being either unbelievably stupid or incredibly smart.

Canadians are eager for a smart budget, a budget that reflects their personal priorities, that helps them deal with the real challenges in their lives. They want a budget that prioritizes, one that is tough but fair, one that is honest about what is — and isn’t — possible.

If there is one thing I have learned through my political activities it is this: the Canadian voter is very smart and must not be underestimated. The party that best connects with Canadians on their terms will be the one that has the most to gain.

Regardless of whether the budget leads to an election, the conventional truth of elections and voter behaviour is that people vote with their wallets. Sure, there are some that can be lured with goodies, but the vast majority realize there is only one taxpayer. Allowing governments to live beyond their means is a recipe for long-term pain.

Budget 2011 is a crossroads budget. Decisions must made on where spending can be cut or constrained, on whether further measures are taken to increase the revenue base (and, yes, that is possible with a combination of corporate and income tax cuts, as ample evidence has shown). Either a clear deficit-elimination and debt-reduction plan is presented (rising interest rates will raise deficit/debt servicing costs, further reducing opportunities to invest in the priorities of Canadians), or the budget will be a lost opportunity to maintain Canada’s position globally.

The Conservatives biggest asset is that they are widely viewed as prudent managers of the economy. They can’t risk this reputation on a budget that contains political pandering, particularly given that it is the ballot question on which they want to run. Given the political climate, Minister Flaherty should ensure the budget is more than a disparate list of disjointed initiatives. He must have a cohesive and coherent narrative that articulates clear conservative positions on the economy and government. The budget must keep Canada on the right path.

Canadians are counting on it.

Goldy Hyder is senior vice president and general manager of Hill & Knowlton in Ottawa. He is a frequent commentator on Canadian politics.